Relationship of US 10Y Bond yield and asset prices

10 Jan, 2022
Category: Financials
Tags: Interest Rate

A few critical levels that could affect the price trends of different asset classes

A few key thresholds for US 10 year bond yield.

1.1%: CTA and trend-following hedge funds will start shorting US bond

1.3%: US Bond bull turns bear

1.5%: Many US hedge funds start shorting US Bond

1.75%: Fund flows from the Stock market into the bond market. However, funds will move to short term bond market

2%: Tech stock will fall a lot

However, the rate is not always good when it’s lower. If short-term bond yield turns negative, money will flow out from money market funds and liquidity in the capital market will plunge.

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